However, rising costs cast a shadow over the company's performance. The year saw the telecom giant's operating expenses rise 18.5 percent to 262 billion yuan, while its free cash flow tumbled 39.4 percent to 12.4 billion yuan from the previous year.

China Telecom Chairman and CEO Wang Xiaochu said that the company, which started selling the Apple iPhone in the second quarter of 2012, increased its marketing expenditure in order to grab a bigger slice of the high-end market.

It also completed a deal to acquire CDMA network assets from parent company China Telecom Corp at year-end, spending 84.6 billion yuan.

"It's common for telecom companies to see lower profit in the first year they cooperate with Apple. We did that for the sake of long-term development," Wang said.

In terms of the outlook for 4G, Wang said the company, along with other market players, is still waiting for the authorities to issue the first license.

"We would not spread the 4G network across the country, but focus on only key cities," Wang said.

"We have a wide-coverage 3G network. Given the experience of foreign peers, we expect 3G and 4G services to coexist in the country."

He also confirmed that if it wins the right to develop 4G services, China Telecom will boost its investment in infrastructure this year, and that would be financed by its listed arm rather than the parent company.

Patrick Shum, a fund manager at Tengard Fund Management, said the prospects for China Telecom were uncertain as the telecom network operator has to invest heavily in 4G.

"There is no guarantee that it can attract more customers ... due to the stiff competition in the mainland telecom market," Shum said.